Shadow economy costs Turkish economy $17 bln: Minister

Shadow economy costs Turkish economy $17 bln: Minister

Nuray Babacan - ANKARA

The shadow economy costs the Turkish economy 60 billion Turkish Liras ($17 billion) annually, Labor Minister Mehmet Müezzinoğlu has said, adding that new measures would be taken to slash it.

The share of the shadow economy in the whole economy is 32 percent, he said.

“A 1 percentage point increase in the informal economy results in an additional 2 billion-lira ($567 million) cost to the Social Security Institution (SGK), namely to the state … The regression of this kind of economy from 52 percent in 2002 to 32 percent now has brought nearly 40 billion liras ($11.4 billion) back to our economy. This is good. However, on the other side of the coin, the shadow economy which totals 32 percent costs our economy and our state 60 billion liras ($17 billion),” he told a group of journalists on June 21.

The government aims to cut the share down to 25 percent initially, the minister noted, adding that an action plan had been prepared to achieve the goal.

“The point here is to follow informal moves in the economy. We will introduce steep legal penalties and sanctions against such actions. We will also prepare incentive plans to make the formal economy more attractive,” he added.

The informal economy is most common among small businesses which hire less than 10 workers, the minister said, calling on employees who witness wrongdoings to inform state institutions.